(Recasts, adds fresh quotes, changes DATELINE)
* Sterling strong near 4-1/2 year high vs dollar
* Trading activity winding down ahead of Easter holidays
* Yellen stresses need for interest rates to stay low
By Anirban Nag
LONDON, April 17 The dollar fell against a
basket of currencies on Thursday after Federal Reserve chief
Janet Yellen reiterated an accommodative monetary policy stance
in comments which gave the euro and the yen a lift.
The dollar's weakness lifted the pound to its highest level
against the U.S. currency since late 2009 as investors continued
to price in expectations for a UK rate hike in the first quarter
of next year after strong jobs and wages growth data on
The sterling trade-weighted index hit a 5-1/2 year high
In her second public speech as Federal Reserve Chair, Yellen
stressed the need for accommodative policy, citing persistently
low inflation and economic slack.
Her dovish remarks offset data suggesting that the U.S.
economy was regaining momentum. U.S. industrial production rose
at a faster-than-expected clip in March, while the Fed's Beige
Book report showed economic activity picked up in recent weeks.
The dollar index was down 0.2 percent at 79.670,
dragged down by lower U.S. yields, while the euro was 0.2
percent stronger at $1.3840.
Sterling was up by a similar margin at $1.6830,
having hit its highest level since late 2009 in Asian trade at
The dollar down 0.2 percent at 102.03 yen.
"Yellen's comments have hurt the dollar as she has indicated
that the Fed is in no hurry to raise rates," said Alvin Tan,
currency strategist at Societe Generale.
"With U.S. yields at the bottom of its recent range we
expect the dollar to remain soft. Only when yields pick up and
the market focuses on rate hikes by the Fed will the dollar
start to rally. That we expect sometime in the third quarter of
Volumes are expected to fizzle out later in the day with
Easter holidays looming. Markets in Tokyo will be open but banks
in London, which has the biggest share of daily turnover, will
be closed on Friday and Monday.
Nevertheless, according to data from Reuters Matching,
trading in dollar/yen was well above its one-month average.
Some investors apparently used comments by Bank of Japan
Governor Haruhiko Kuroda as an excuse to buy back the yen, even
though his remarks contained nothing new, Ayako Sera, senior
market economist at Sumitomo Mitsui Trust Bank said.
The central bank chief said the BOJ would adjust monetary
policy when needed but said nothing to indicate that more easing
steps would be forthcoming anytime soon.
The euro was flat against the yen at 141.20 but
edged up against the dollar with some of its gains linked to
demand for an Italian bond from overseas investors, traders
(Additional reporting by Lisa Twaronite; Editing by Susan